Dealing with the Crisis

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Abstract

The immediate financial sector policy
responses to the financial crisis, including emergency
liquidity support, expansion of financial safety nets, and
interventions in financial institutions, have succeeded in
stemming widespread panic. But the effort has generally been
insufficient and ad hoc. Issues that remain include the
resolution of problem assets, the restructuring of troubled,
systemically important financial institutions, and the
development of credible exit strategies. Only a handful of
countries have attempted to tackle these issues head-on. As
past experience has shown, that may well have negative
repercussions for the duration and strength of a subsequent recovery.